Hwa can smell that he is female but after the memory wipe Seolhyun grew up thinking that he is male and is now convinced the the scent Hwa smells on him is somehow from his brother. He came to that conclusion on his own without realizing what Hwa actaully smells is his actual scent. His brother is male and I think that’s why Hwa’s scent in Seolhyun room bothered him. He found it annoying because Male lycans are territorial and sensitive to another male lycans scents (Hwa is both a male lycan and vampire so Seolhyun could smell his half lycan scent).
Actually Hwa who marked Seolhyun
Remember, Seolhyun thinks the female smell Hwa smelled is his brother’s smell that rubbed onto him. Seeing he has already made up his mind that it’s the reason why Hwa thinks he is female he doesn’t try to further question it. He then went on the mark Hwa which altered his scent a bit so to Hwa Seolhyun smells extra good. Seolyun believes this has further helped him deceive Hwa into thinking he is female. That’s why he feels so guilty towards Hwa, because he genuinely thinks he’s deceived Hwa into thinking he is female but the twist is he actaully is female. He is afraid of being found out as a liar and losing Hwa so he hasn’t brought it up.
Seolhyun is female. My theory is when they were young Seolhyun met Hwa and marked him as his mate. Males can’t mark a female but they never said a female can’t mark a male. When Seolhyun marked Hwa it must’ve angered his lycan clan since female lycans are rare. I’m sure they already had plans to have him paired with one of their own pure blood male lycans. So, inorder to severe the mark they tried to kill Hwa but instead he survived with injuries and was hospitalized. Because of this Hwa’s parents found out what was going on and they were ready to go to war with Seolhyun’s family in order to protect their son. However, to avoid casualties both sides came to a compromise which was to severe the mark Seolhyun made on Hwa by erasing both their memories. The lycan clan then lied to Seolhyun that he is male and had him stay with his male lycan brother hoping the male scent will mask Seolhyun’s female sent and hide him from potential pursuers. All while Seolhyun believes his brother is female. Despite all the efforts, they didn’t account for the possibility that a female marking her mate was a strong bond that couldn’t be easily erased by a memory spell. Years later, Seoulhyun and Hwa met again.